If you really respect the non-finalist designer's work, than it would be only right that the organization who benefits from this mark, to compensate the designer.
If Design21 can't ethically award this designer with the $5000 award, at least the beneficiaries should provide some financial compensation. It's unfair to use this designer's mark without any compensation besides some publicity - even if the designer agrees that would be satisfactory. That, would indeed be unethical and taking advantage of the designer.
I'd like to know if the designer will get paid, at least in the traditional sense of getting 'hired'.